SALES FORECASTING

The Strategic Edge principals have nearly 70 years experience in forecasting
sales for retailers, and developers. When forecasting sales, The Strategic Edge
would typically employ the following (or similar) methodology:

1. Gather Data for Proposed Site and Market. The Strategic Edge would
gather data on the proposed store location and market, including precise site
location (latitude/longitude), sister stores, and competitors' locations.

2. Define Trade Area. We would define a trade area for the potential
store based on sister store locations, competition, access patterns, physical
and psychological barriers, our expertise, any prior knowledge of the market,
and the knowledge gained from the database. This can be completed on an
in-office basis but for the best accuracy, detailed fieldwork is required.

3. Develop Trade Area Population, Demographic, Lifestyle and Business
Characteristics. For the defined trade area, The Strategic Edge would
estimate and project population, selected demographic and lifestyle
characteristics, and employment data. The specific characteristics would
include, at a minimum, the variables determined to be important from the
correlation analysis and which are inputs to the forecasting models.

4. Forecast Sales. We would forecast sales for potential locations
using a combination of the forecasting models. This could include normal
curves, regression models, and the analog database. The Strategic Edge, Inc.
would use its experience and judgement in its final sales forecast, i.e. how
the various forecasts resulting from the several models are integrated and the
final forecast derived. Transfer sales ranges or cannibalization from existing
stores would also be estimated for in-fill locations, in order to estimate
incremental sales gain ranges.

MODELING

The Strategic Edge can develop a forecasting model for your retail business
which can be implemented by our staff on a site by site basis. Forecasting
models can also be developed for your research, finance, or real estate department
to implement on an as needed basis. The Strategic Edge might develop a model
for your firm by conducting the following (or similar) multi-step methodology:

1. Perform Correlation Analysis. The Strategic Edge and its
associates would create and analyze a store database of population,
demographics, lifestyles, business data, store sales information, competitive
measurements, and distance measurements. The statistical correlation analysis
would measure the relationship between each variable in the database and store sales
and performance measurements. Testing all variables against an array of store
performance measures, while controlling for the differences in population and
business density and documenting the distances between customer and store,
allows variables that significantly impact store performance to be identified.
The basic premise of this approach is that the performance of new stores can be
predicted based upon the documented performance of existing stores and past
customer shopping behavior that operate in comparable situations.

2. Develop Models. Sales data would be analyzed against customer
demographics and business data to further understand their relationships and
how they might drive sales. The forecasting models may take the form of normal
curves, regression or models, and/or analog comparisons at both the zip code
and trade area level. The model development process is a very creative and
iterative process whereby The Strategic Edge staff and associates would meet
regularly to refine the output. The management of your business would also be
very involved in the process to provide guidance, insights, and direction.